Source: Wall Street Journal.
On top of AT&T's $1 billion, the writedown wave so far includes Deere & Co., $150 million; Caterpillar, $100 million; AK Steel, $31 million; 3M, $90 million; and Valero Energy, up to $20 million. Verizon has also warned its employees about its new higher health-care costs, and there will be many more in the coming days and weeks.
What are these about? Well, these companies are being punished for giving retirees prescription benefits. Yes, instead of dumping their retirees in to the Medicare prescription system, these companies provide retires private retirement benefits.
Oh, the horror. Democrats must punish. The Obamacare bill punishes employers for giving these benefits. The bill levies massive taxes.
Why the writedowns now if the taxes are in the future? Accounting rules for publicly traded companies require them to recognize the present value (cost, really) of future liabilities.
Democrats, who never have been much for logic or for taking resonsibility for their own actions, are incensed.
How dare these compnies follow the accounting rules and reveal the hidden costs of Obamacare! They must be further punished by appearing before Congress to get abused in hearings!
Meanwhile, Henry Waxman and House Democrats announced yesterday that they will haul these companies in for an April 21 hearing because their judgment "appears to conflict with independent analyses, which show that the new law will expand coverage and bring down costs."
In other words, shoot the messenger. Black-letter financial accounting rules require that corporations immediately restate their earnings to reflect the present value of their long-term health liabilities, including a higher tax burden. Should these companies have played chicken with the Securities and Exchange Commission to avoid this politically inconvenient reality? Democrats don't like what their bill is doing in the real world, so they now want to intimidate CEOs into keeping quiet.
It gets worse:
I blame "The One" (i.e., Public Enemy No. 1, Barack Obama). Public Enemy No. 2, Nancy Pelosi, is not far behind.
As Joe Biden might put it, this is a big, er, deal for shareholders and the economy. The consulting firm Towers Watson estimates that the total hit this year will reach nearly $14 billion, unless corporations cut retiree drug benefits when their labor contracts let them.
Meanwhile, John DiStaso of the New Hampshire Union Leader reported this week that ObamaCare could cost the Granite State's major ski resorts as much as $1 million in fines, because they hire large numbers of seasonal workers without offering health benefits. "The choices are pretty clear, either increase prices or cut costs, which could mean hiring fewer workers next winter," he wrote.
The Democratic political calculation with ObamaCare is the proverbial boiling frog: Gradually introduce a health-care entitlement by hiding the true costs, hook the middle class on new subsidies until they become unrepealable, but try to delay the adverse consequences and major new tax hikes so voters don't make the connection between their policy and the economic wreckage. But their bill was such a shoddy, jerry-rigged piece of work that the damage is coming sooner than even some critics expected.